How to Rebuild Your Finances After a Divorce

by Kathy Tsoukalas
How to Rebuild Your Finances After Divorce photo

It’s a whole new financial world after divorce. Don’t enter unprepared. Take these steps to rebuild your finances after divorce.

It’s no secret that divorce can uproot your life. It can also wreak havoc on your emotions, as well as change your financial situation drastically. Assets are usually split between the two parties. The main breadwinner is responsible for paying alimony and possibly child support. The low-income earner will likely have to build a new career, often from scratch.

While it is possible to overcome these challenges, it will take more than just trial and error to get you through this time. Here is a guide that will help you gain solid control of your finances during divorce, no matter what shape they’re in.

Understand Your Credit

If experiencing financial difficulty, your first impulse might be to avoid checking your credit score. It really does help to know where you stand so that you can formulate a plan.

Your credit affects various aspects of your financial life. It can help you determine if you are able to get a loan, such as a car loan or a mortgage, at a good rate. A good score helps you qualify for a better credit card. It can even help you get a better job.

If your credit score is low, you will want to take measures to repair it so that you can experience the financial benefits that come with a higher number.

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Rework Your Budget

When you were a married couple, your budget included the needs of both spouses, as well as dependents. Once the two of you decide to separate, the budget should be reworked to account for these changes. This is also a great way to help you confront the reality of your changed financial situation and will help you get on track more quickly.

According to Bloomberg, divorcing couples experience a decrease in their standard of living. For women over fifty, that decrease is around 45%, and for men, the decrease is around 21%. This makes it even more important to create a budget and stick with it.

Now that the standard of living has decreased, a budget will prevent you from reverting to old spending habits that could sink you into debt. Alternatively, a budget can help you crawl out of debt at a much faster rate because it will help you control your spending.

Create a Financial Plan

When facing an uncertain future, it helps to have a roadmap that will steer you back on track. When it comes to your finances, there are different facets that need to be addressed, especially during and after a divorce.

Creating a financial plan will help you improve your finances, no matter where you stand. This roadmap can help you get out of debt, start an emergency fund, create a college fund for your grandchildren, help you save more for retirement, and have enough money to live a good life.

Are you confused as to where to start? Consider hiring a financial advisor to help you get your finances in order. A good advisor will help you create a debt management plan, set a budget, develop your investment strategy, and in general, get and keep your financial life on track.

Be sure to hire an advisor who has your best interests at heart, though, and is not motivated only by making commissions off of your investments.

Increase Your Income

Do you feel as if you are doing everything you can to fix your finances, but feel your efforts aren’t enough? If so, it might be time to find ways to increase your income.

Develop your career so that you can discover your true earning potential. Find a new job that pays you more money. Start a business doing something you love. Take on a second job or start a side gig to supplement your income. If you have more money coming in, your finances will rebound that much faster.

While it’s true that divorce can uproot your finances, it is possible to not only rebound, but to successfully build a prosperous future. The key is to stay disciplined, control debt, and ask for help when you need it.

Reviewed February 2021

You deserve a comfortable retirement.

Subscribe to After 50 Finances, our weekly newsletter dedicated to people 50 years and older. Each issue features financial topics and other issues important to the 50+ crowd that can help you plan for a comfortable retirement even if you haven't saved enough.

Debt ChecklistSubscribers get The After 50 Finances Pre-Retirement Checklist for FREE!

Your Email:

You deserve a comfortable retirement.

Subscribe to After 50 Finances, our weekly newsletter dedicated to people 50 years and older. Each issue features financial topics and other issues important to the 50+ crowd that can help you plan for a comfortable retirement even if you haven't saved enough.

Debt ChecklistSubscribers get The After 50 Finances Pre-Retirement Checklist for FREE!

Your Email:

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